Spain will have to raise IVA rate on some healthcare products

Spain will have to raise the IVA (VAT) rate applied to some healthcare products and services after the European Court of Justice ruled in favour of the European Commission, which successfully argued that the Spanish government had incorrectly implemented EU rules on VAT.

All healthcare services and products in Spain are currently either exempt from VAT or are subject to the reduced rate of 10 percent. According to the ruling, which is binding, Spain applies a reduced rate to a broader range of goods than is provided for under VAT rules.

The Spanish Finance Ministry has said it will not raise VAT on the affected healthcare products until it had fully studied the Court’s ruling, adding that although the sentence is binding, it is not immediate. The ministry said it would have to change laws governing the application of VAT, a process it says would take months.

EU law allows reduced rates to be applied to pharmaceutical products of the type normally used for healthcare, the prevention of diseases and for medical or veterinary treatment, along with medical equipment and apparatuses normally used to alleviate disabilities. The Commission opened legal proceedings against Spain in 2010.

The government had argued that the EU rules failed to sufficiently define the categories of goods and services to which reduced rates can be applied.

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